Saskatoon city councillors passed a series of motions on Wednesday to draw over $9 million from reserves to cover a budget shortfall of nearly $11 million in its 2022 budget.
The deficit is driven by various issues including inflation, fuel and energy costs, additional salaries, carbon taxes and lower-than-expected revenue from a number of sources such as indoor rinks, the forestry farm park and zoo, and leisure centres.
During initial deliberations for the 2022 budget, council ra $20.3 million dollar increase in operating spending.
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On Wednesday, the city finance committee agreed to draw $6.68 million from the fiscal stabilization reserve, leaving it with no money until a planned $1.64 million transfer into the reserve later this year.
“The intent of the fiscal stabilization is in those years we have surpluses we put that aside so in years of deficit we can avoid shocks to property taxes,” said Clae Hack, the city’s chief financial officer.
“I’m not aware of any best practices in terms of how much should be set aside … The challenging budget years we’ve had over the past five, six, 10 years have kind of depleted that reserve,” he said.
Councillor Bev Dubois asked Hack what the council should do if they have a challenging year now that most of the reserves have been drained.
“The simplest answer for me, like to a resident, if I was asked, is we have to cut costs,” said Dubois.
Another $2.3 million will come from other existing reserves and by delaying reserve transfers.
The fuel stabilization reserve, which is to offset cost overruns for tax support fuel expenses, and the reserve for snow and ice management will also be completely drained.
The other $1.97-million, which is from the costs of addressing the large snowfall in December, will be covered as part of a plan to borrow nearly $20 million in the future.
Last year, Hack warned members of council the city was running out of options to cover budget shortfalls.
-With files from Matt Young
